High interest rates continue to subdue Oahu’s housing market where prices pushed down this year could remain flat in 2024, according to a University of Hawaii analysis.
On Saturday, transaction data from April showed that sales and prices for previously owned homes in Hawaii’s biggest residential real estate market fell from the same month in 2022.
The Honolulu Board of Realtors reported that the median sale price for single-family homes declined 10% to $999,995 in April from $1,105,000 in the same month a year ago while the condominium median sale price slipped 2% to $500,000 from $510,000 in the same period.
The trade association also said in its report that the number of sales in April sank 43% to 208 for single-family homes from 365 a year earlier, and dropped 38% for condos to 420 from 672 in the same period.
“We continue to see the market settle following the spike in interest rates and rising inflation,” Fran Villarmia-Kahawai, president of the Honolulu Board of Realtors and an agent at Properties International Ltd., said in the report.
Villarmia-Kahawai also said relatively low inventory has been keeping median sale prices fairly steady from month to month recently.
Single-family home median sale prices had been at or a little above $1 million from July 2021 until January, when the figure receded to $970,000. In February the figure edged up to $987,000 and then $1,083,750 in March before drifting lower in April to $999,995.
For condos the median sale price has hovered around $500,000 since mid-2021, and set a record in March at $536,000. The record, according to a report from local real estate brokerage firm Locations, was in part due to more prospective homebuyers focusing on the condo market because they had been priced out of single- family homes by high interest rates.
The average 30-year mortgage rate has been between 6% and 7% since mid-September, about double what it was for much of the prior two years, according to mortgage buyer Freddie Mac. The rate last week was 6.39%.
Inventory of homes available for sale on Oahu in April was lower than in recent months but higher than a year ago.
There were 1,679 single- family homes and condos listed for sale in April, and the level has been falling for five straight months since being at 1,926 in November. In April 2022 there were 1,312 single-family homes and condos on the market.
Chad Takesue, chief operating officer at Locations, said in a report released Saturday that he expects to see a less competitive environment with more options for buyers this summer in segments of the market where inventory grows.
“Sellers in those markets will need to price accordingly to ensure a successful sale,” he said in the company’s report.
Takesue also said that neighborhoods with low supply are still experiencing competitive market conditions, while neighborhoods with growing inventory are exhibiting fewer price bid-ups and more significant tapering off in median sale prices.
The University of Hawaii Economic Research Organization said in a March report that contraction in home sale volume, which began in 2022, has been dramatic by historical standards and will contribute to additional resale price declines.
“The current contraction in sales volume is already larger than what was experienced during the subprime mortgage crisis that began in 2007,” the report noted.
UHERO forecast that for all of this year the median sale price for single-family homes will be down 7% from 2022 at close to $1 million and then remain flat in 2024. According to the Honolulu Board of Realtors, this median sale price figure is down 8% over the first four months of the year compared with the same period in 2022.
For condos, UHERO forecast a 6% decline in the median sale price this year to around $475,000 and then almost no change in 2024. Data from the Honolulu Board of Realtors put the condo median price this year through April down 2%.
HOME SALES
The number of homes sold on Oahu in April with the median price and percentage change from the same month in 2022:
HOMES
SALES MEDIAN PRICE
April 2023 208 $999,995
April 2022 365 $1,105,000
Change -43.0% -9.5%
CONDOS
SALES MEDIAN PRICE
April 2023 420 $500,000
April 2022 672 $510,000
Change -37.5% -2%
Source: Honolulu Board of Realtors
